Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Investor Day (June 2016)
52 slides from Royal Bank Of Canada's investor day presentation, Jun 17, 2016
Slide 1: City National Investor and Analyst Day
City National Investor and Analyst Day June 17, 2016 All financial information contained herein is in U.S. dollars as reported under U.S. GAAP, unless otherwise noted
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian
Slide 3: City National Investor and Analyst Day Agenda
City National Investor and Analyst Day Agenda Welcome and Opening Remarks Dave McKay 5 President & CEO, RBC City National Overview & Growth Initiatives Russell Goldsmith Chairman & CEO of City National Bank & Chairman of RBC U.S. Wealth Management 15 9:00 AM Chris Carey EVP & CFO of City National Ba
Slide 4: Welcome and Opening Remarks
Welcome and Opening Remarks Dave McKay President and Chief Executive Officer, RBC 4
Slide 5: RBC at a glance
RBC at a glance Diversified business model with leading client franchises Size and scale to deliver an exceptional client experience Disciplined approach to driving sustainable growth Focused strategy in our key markets 5 Overview of RBC
Slide 6: Diversified business model with leading client franchises
Diversified business model with leading client franchises Capital Markets Premier North American investment bank with select global reach 10th largest global investment bank by fees(1) Full suite of integrated Corporate & Investment Banking and Global Markets services Personal & Commercial Ban
Slide 7: Size and scale to deliver an exceptional client experience
Size and scale to deliver an exceptional client experience RBC’s key strengths Trustworthy advice delivered by our experienced people Simple and compelling digital experience Breadth of data to know our clients better and add value Seamless, integrated experience across physical and digital
Slide 8: Strong track record of growth
Strong track record of growth Consistent earnings growth(1) Most efficient Canadian bank(3) Net income (C$BN) Efficiency ratio (%) 10.0 9.0 8.3 64.9% 7.5 61.7% 57.3% 57.4% 5.0 5.0 51.3% Peer 1 Peer 2 Peer 3 Peer 4 2012 2013 2014 2015 YTD YTD (2) RBC Q2/15 Q2/16 Strong capital position and Strong Ret
Slide 9: Disciplined approach to delivering sustainable growth
Disciplined approach to delivering sustainable growth Medium-term financial performance objectives Diluted EPS Growth 7%+ Return on Equity 18%+ CET1 Strong Dividend Payout Ratio 40% - 50% Total Shareholder Returns(1) Strong dividend growth(2) In Q2/2016, we announced a 3% increase to our quarterly d
Slide 10: Focused strategy in our key markets
Focused strategy in our key markets In Canada, to be the undisputed leader in Revenue by Geography (1) financial services Canada U.S. In the U.S., to be the preferred partner to 62% 21% corporate, institutional and high net worth clients and their businesses Int’l 17% In select global financial cent
Slide 11: RBC's U.S. presence
RBC’s U.S. presence RBC U.S. Businesses 10 year vision in the U.S. Private & Capital Private Commercial Banking markets banking Wealth Trust & Leading provider of Business Management select financial estate solutions services to U/HNW(1), Affluent clients and their businesses in the Asset markets th
Slide 12: City National enhances RBC's U.S. presence & accelerates growth
City National enhances RBC’s U.S. presence & accelerates growth Aligns with RBC’s strategic goals High quality franchise well positioned for growth Clear path to deliver on synergies Creates a platform for long-term growth in the U.S. 12 Overview of RBC
Slide 13: History of City National Bank
History of City National Bank 13
Slide 14: City National Overview & Growth Initiatives
City National Overview & Growth Initiatives Russell Goldsmith Chairman and Chief Executive Officer of City National Bank, Chairman of RBC U.S. Wealth Management 14
Slide 15: The City National difference
The City National difference Unique market position Attractive client segments Diversified business model with scalable platforms Strong Wealth Management capabilities Opportunities for growth both in-market and out of market 15 The City National difference
Slide 16: City National – Premier U.S. private & commercial bank
City National – Premier U.S. private & commercial bank Highlights Overview of capabilities Founded in 1954 and headquartered in Los Angeles, Private Banking & Commercial Banking California with ~US$42BN in assets(1) Customized banking and credit solutions Quarterly profits for the past 23 cons
Slide 17: Unique market position
Unique market position Highlights Positioned in top 3 U.S. markets HNW population (2014; in 000s) by MSA(3) City National is in the top 3 U.S. markets with the highest number of HNW households Leading franchise in Los Angeles, growing presence in New York and San Francisco Bay Area(1) 963 − Cali
Slide 18: Attractive client segments
Attractive client segments Fast growing HNW population(1) Strong commercial loans growth(3) >10x ~3x 10.3% 8.7% 3.6% 0.8% Total population HNW population Non-C&I loans C&I loans growth (5) growth U.S. HNW population has grown over 10x Growth of Commercial & Industrial (C&I) loans faster than tot
Slide 19: Diversified business model with scalable platforms
Diversified business model with scalable platforms Private Commercial Specialty Commercial Wealth Core Client Entertainment Banking Banking Real Estate Management Banking Services Award Full service Integrated Unique One of Full suite of Extensive advice & industry America’s winning mid- banking per
Slide 20: Business model of high-touch service, solutions and advice
Business model of high-touch service, solutions and advice 9 of 10 clients surveyed said they would likely refer City National to others(1) Business loans and lines of credit Entrepreneurs & Key industry specialties Professionals Private banking High-touch service Asset management Relationsh
Slide 21: Business model of high-touch service, solutions and advice
Business model of high-touch service, solutions and advice 21
Slide 22: Combination of our strong Wealth Management capabilities
Combination of our strong Wealth Management capabilities U.S. Wealth Management (ex-CNB) City National Wealth Management National franchise Ranked by Barron’s as one of the top wealth − 1,800+ financial advisors across 41 states in managers in the U.S. for the past 15 years(4) ~185 branches Br
Slide 23: Enhanced offerings for City National and RBC clients
Enhanced offerings for City National and RBC clients You Your Family Clients Family Business Your Business 23 The City National difference
Slide 24: Expanding product offerings to select high net worth clients
Expanding product offerings to select high net worth clients Deposits, credit, investments, Collaborating with RBC U.S. trust and planning capabilities High You Your Net Family Wealth Management offices Worth Family Business within and outside of City Initially targeting the top 10% Your Busin
Slide 25: Leveraging the combined platform for commercial clients
Leveraging the combined platform for commercial clients Enhanced offering including, Enhanced offering to existing You Your Family banking, credit and treasury Commercial clients Family Business needs in the U.S. Clients Your Business Banking services to City National ~82,000 RBC Canadian cr
Slide 26: Extending industry verticals with RBCCM expertise in the U.S.
Extending industry verticals with RBCCM expertise in the U.S. Leveraging City National’s RBCCM advisory services and deep, long standing Corporate & You Your Family product platform capabilities, Family Business relationships in select Institutional Your Business including IPOs and M&A industry
Slide 27: Successful collaboration in action
Successful collaboration in action Examples of success within first 180 days of transaction close(1) ~US$4.5BN of City National balance sheet growth − ~US$3BN of U.S. Wealth Management sweep deposit balances − ~US$140MM of loan growth; additional ~US$380MM in potential credit opportunities identif
Slide 28: Collaboration success stories
Collaboration success stories 28
Slide 29: Significant growth potential in footprint
Significant growth potential in footprint Over US$6.1TN(1) in HNW Investable Wealth (US$BN) New York 3,528 Metro CNB Market Share(2): 0.2% >US$6.1TN Key California 1,335 1,299 2,634 MSAs CNB Market Share: 5.0% CNB Market Share: 0.7% (3) Los Angeles San Francisco Bay Area New York Metro Californi
Slide 30: Strategic expansion to potential U.S. markets
Strategic expansion to potential U.S. markets The top 10 U.S. MSAs account for almost 2/3 of HNW/Affluent households(1) City National location RBC Wealth Management location RBC Capital Markets location Evaluating markets for expansion - Market opportunity for private and businesses banking - Cros
Slide 31: City National Financial Performance
City National Financial Performance Chris Carey Executive Vice President and Chief Financial Officer, City National Bank 31
Slide 32: City National financial performance
City National financial performance Track record of outpacing the industry Leading deposit franchise well positioned for rising rates Well diversified and high quality loan portfolio Strong financial performance with momentum continuing in 2016 32 City National financial performance
Slide 33: Track record of outpacing the industry
Track record of outpacing the industry(1)(2) Strong loan growth(3)… ...over 3x the industry growth… US$BN >3x 23.5 17.6% 12.3 5.6% (2) 2011 2015 Industry City National Strong deposit growth… …over 1.5x the industry growth US$BN 30.5 >1.5x 20.4 10.6% 6.5% (2) 2011 2015 Industry City National (1) 4-ye
Slide 34: Leading deposit franchise well positioned for rising rates
Leading deposit franchise well positioned for rising rates Attractive deposit franchise Highly interest rate sensitive Branch-light footprint with deposits per Highly interest rate-sensitive bank, set to branch over 3.5x the median of U.S. benefit from rising interest rates banks(1) − ~60% non-i
Slide 35: Well diversified and high quality loan portfolio
Well diversified and high quality loan portfolio Highly diversified loan portfolio of US$24.3BN(1)(2) Strong residential mortgage portfolio Loans: 70% commercial, 30% consumer Average figures Real estate construction Installment 4% 1% Commercial real Loan size US$1.3MM estate mortgages Residential 1
Slide 36: Strong financial performance
Strong financial performance 2015 Highlights 2016 Results(2) Net income (US$MM) Net income (US$MM) YTD earnings of US$89MM (1) 275 Adjusted YTD earnings of $US162MM(3) 256 (3) 230 (3) 84 78 208 92 Integration and 172 33 acquisition costs 40 183 Reported 51 Net Income 38 2011 2012 2013 2014 2015 Q1/2
Slide 37: Clear Path to Success
Clear Path to Success Janice Fukakusa Chief Administrative Officer and Chief Financial Officer, RBC 37
Slide 38: Clear path to success
Clear path to success Continued strong core growth Deposit & expense synergies Revenue growth initiatives Leverage to higher rates 38 Clear path to success
Slide 39: Continued strong core growth
Continued strong core growth Target 10%+ annual City National balance sheet growth through 2020 - Organic portfolio growth - Continuing to add to both client facing and support staff headcount - As at April 30, 2016, total sales headcount up 14% YoY Light-touch approach to integration to preserv
Slide 40: Deposit and expense synergies underway
Deposit and expense synergies underway Forecast deposit synergies Forecast expense synergies US$MM, pre-tax US$MM, pre-tax 80 40 70 30 2018 2020 2018 2020 ~US$3BN of sweep deposit balances on Expense synergies are underway including: City National balance sheet as of Q2/2016 - Procurement contra
Slide 41: Revenue growth initiatives
Revenue growth initiatives Cross-sell & collaboration - Enhancing offerings to HNW, commercial, cross-border and corporate clients Expansion in market - For example, new branch opening in New York City expected in August 2016 Expansion out of market - Criteria including: Market opportunity f
Slide 42: Clear path to success: City National
Clear path to success: City National Continued Strong Deposit & Expense Revenue Growth Interest Rate Core Growth Synergies Initiatives Sensitivity Preserve and enable Utilize low-cost sweep Cross-sell to HNW, Highly interest rate- City National’s core deposit balances to commercial and sensi
Slide 43: City National 5-year view (pre-tax income)
City National 5-year view (pre-tax income) 5 year CAGR: ~22% ~US$250–300MM (4) ~US$1.0–1.1BN (3) US$210MM+ Deposit Synergies (US$40MM) Expense Synergies (US$80MM) (2) ~US$200MM Growth Initiatives (US$90MM) (1) ~US$400MM City National merger-related ~US$80MM expenses City National pre-tax income ~US$
Slide 44: Closing Remarks
Closing Remarks Janice Fukakusa Chief Administrative Officer and Chief Financial Officer, RBC 44
Slide 45: City National enhances RBC's U.S. presence & accelerates growth
City National enhances RBC’s U.S. presence & accelerates growth Aligns with RBC’s strategic goals High quality franchise well positioned for growth Clear path to deliver on synergies Creates a platform for long-term growth in the U.S. 45 Closing remarks
Slide 46: a. te nn see Mr
a. te nn see Mr
Slide 47: Executive Profiles
Executive Profiles 47
Slide 48: Executive profiles: Dave McKay
Executive profiles Dave McKay President and CEO, RBC Dave McKay was appointed President of RBC on February 26, 2014 and Chief Executive Officer and Director of the Board on August 1, 2014. In his previous role as Group Head, Personal & Commercial Banking, which he held from November 2012 to February
Slide 49: Executive profiles: Janice Fukakusa
Executive profiles Janice Fukakausa CAO & CFO, RBC Janice Fukakusa is RBC’s Chief Administrative Officer and Chief Financial Officer. As a member of RBC’s Group Executive, she is one of eight executives responsible for setting the overall strategic direction of RBC. In addition, she chairs Group Ope
Slide 50: Executive profiles: Russell Goldsmith
Executive profiles Russell Goldsmith Chairman and CEO of City National Bank Chairman of RBC U.S. Wealth Management Russell Goldsmith is Chairman and Chief Executive Officer of City National Bank, which was acquired by Royal Bank of Canada (RBC) on November 2, 2015. When Mr. Goldsmith became City Nat
Slide 51: Executive profiles: Christopher J. Carey
Executive profiles Christopher J. Carey EVP & CFO of City National Bank Christopher J. Carey is Executive Vice President and Chief Financial Officer of City National Bank. Mr. Carey oversees City National’s finance, accounting and treasury functions, as well as asset/liability management, insurance,
Slide 52: Note to users
Note to users We use a variety of financial measures to evaluate our performance. In addition to generally accepted accounting principles (GAAP) prescribed measures, we use certain key performance and non-GAAP measures we believe provide useful information to investors regarding our financial condit